Tag: e commerce app builder

Ecommerce Middle east

5 Major Challenges Faced by E-commerce Mobile Apps in the Middle East and How to Tackle Them

The evolving e-Commerce industry and the M-commerce boom are set to turn around the face of economy in the middle east. But this exciting transition does not come without its fair share of obstacles. So what are the challenges these industries face?

1. Traditional logistics

Many of the traditional logistics businesses find it hard to create an online presence. In the Middle East, although the potential for e-commerce is high, it remains relatively unexplored largely due to logistical challenges. Automated discovery of delivery location using GPS services is almost impossible since home delivery postal systems do not exist. This in turn requires mobile apps to be able to utilize location services to automatically tag the order location, increasing the investment and time requirement for the development of apps. The under-developed warehouses & stocking points in the region pose another challenge for the e-commerce industries. Since the traditional retail businesses did not require such infrastructure, the initial investment of e-commerce transition for the local industries increases.

The solution?

Retailers have already started adopting omni-channel strategies to solve the investment problem, by utilizing the pre-existing retail outlet infrastructure to serve as warehouses and stocking locations. Better development of e-commerce mobile apps, keeping in mind the above requirements, is another thing to keep in mind.

2. Competitive pricing and customer satisfaction

With further growth of M-commerce, companies tend to focus on the most common customer requirement: price. As per PwC’s 2017 e-commerce report, 40 % of respondents in the region said ‘cheaper price’ is the biggest motivation to buy online. And while that wins the battle for e-commerce industry as a whole, the competition between the existing online retailers and the newer generation of app development is intense, so much so that quality of products and services gets compromised, leading to consumer dissatisfaction, bringing the entire process of customer approval back to square one.

The solution?

As per the KPMG 2017 Global Online Consumer Report, while pricing remained the most common reason why people shopped online, factors like return policies and being a trusted website are far more important for the baby boomer generation, who are biggest spenders and almost as frequent shoppers as the most commonly thought target generation, the millenials. Focusing on customer satisfaction, therefore, becomes more important than blatant lowering of price without consideration of service quality. Safer payment gateways, and more efficient and faster delivery times will serve better to ensure customer satisfaction and increase participation.

3. Communication gap: The hurdles to Loyalty creation

The e-commerce industry, especially the newly developing ones, such as in this region, suffer from a profound lack of loyalty. A very important aspect which allowed traditional brick and mortar services to flourish was direct communication between the seller and buyer, which made the entire process trustworthy, complete with feedback and problem solving, making it an experience the consumer wants to repeat. E-commerce in the region as of now, however, lacks any such interaction. With cheaper pricing and faster delivery being the drivers of consumer satisfaction, loyalty to a single brand becomes a challenge. Another obstacle is incentives. Offline shopping is heavily incentivized, with shops offering membership cards, special discounts and loyalty benefits personalized for each person. Online platforms still suffer from the lack of such incentives.

The solution?

The KPMG 2017 report shows that providing excellent customer support, having loyalty programs and exclusive member offers constituted the 3 major criteria for customer loyalty. Understanding the local demographics and creating content based upon local patterns instead of a globally accepted safe formula is the key to surviving the cut throat e-commerce competition.

4. Omnipresence: Omni-commerce

The concept of omni-channel business is very simple – in theory, at least. Creating a network such that a brand is present everywhere, in all forms, not restricted to just online vs offline conundrum. It has become a business prerequisite to survive in a rapidly developing e-commerce scene. So where do the problems lie?

A. The pure-players (Only e-commerce) and the brick and mortar retailers (who are trying to enter the e-commerce scene) both are at a risk of becoming obsolete if they continue to rake in profits by conventional safe approaches and fail to adapt themselves to the rising consumer expectations. And as of now, no omni-channel experience of substantial quality exists from these industries in the region.

B. Another problem that is being recognized, due to already established omni-channel services globally, is the failure of service providers to integrate the channels to provide a smooth experience.

The solution?

Omni Channel

As Martin Simonsen from Implement Consulting Group writes, “the winning solution being the ability to deliver a seamless customer experience in alignment with those needs and simultaneously integrate all channels on relevant platforms, each carefully adjusted to enhance what it does best.”When done well, buyers seamlessly transition from one channel to the next, blissfully falling deeper and deeper into the brand experience.

A research by McKinsey Research and Harvard Business Review showed that Customers who used 4+ channels spent 9% more in the store, on average, when compared to those who used just one cchannel. Aberdeen Group found that companies with omni-channel engagement strategies enjoy an aaverage 9.5% increase in annual revenue, compared with 3.4% and 89% retention rate of their customers vs 33% for companies with weak omni-channel customer engagement. The result? Better revenues, loyalty and market presence.

5. Funding challenges: The start-up bottleneck

How does one of the biggest investor markets in the world become a problem for its own start-ups? Dubai-based Research and Markets estimates that around $165 billion are tied up in venture capital firms, but most of them are non-regional VC funds. Traditionally, Middle Eastern investors have looked at investment opportunities outside of the region, with real estate returns been spectacular around the region, hence the hesitancy to step out of the safe profit zone. Other than that, lack of information about start-ups in the region and doubt of the legitimacy of the project discourages investors. The region suffers from a low credit card penetration, hence setup and payments becomes a costly affair.

The solution?

The investment scene has started to change, more so in face of the changing commerce landscape in the region. Al Tayyar Travel Group, the largest travel company in the region and Majid Al Futtaim Group, a diversified private company, have both invested in startups recently.

Another important option which comes to the fore in midst of unwilling investor is: Crowd-funding. With sky high internet penetration in the region, and increasing investors taking risks, crowd-funding is more important than ever today.

A newer challenge

The GCC introduced a 5% VAT following expensive military campaigns and drop in global oil prices. Introduction of a 5% tax seems pale in comparison to global VAT rates, but poses threat to investments, revenue and spending in the region. The transition to e-commerce for many businesses is now pricier, and so are the services provided by them. However, the VAT tax provides an alternative source of income in the region, and may prove instrumental in providing a safe haven for industrialists and start-ups alike in a future with lower global oil prices.

Conclusion

The MENA region is poised to experience an e-commerce boom despite the challenges faced by the companies. Smart planning, understanding the demographic, the user base and catering to their needs, all the while adopting the concepts of Omni-commerce will prove beneficial both to the retailers transiting to e-commerce and the ones trying to excel in it.

subscription commerce

Why Subscription Commerce is Popular?

With passing years, there is a noticeable change observed in the trends and patterns of the ecommerce industries. Ecommerce is no more confined to developing an ecommerce app and website. It has grown more. Convenience and demands of the consumers are the main factors which have led to the emergence of new concept called Subscription Commerce.

Basic Concept of Subscription Commerce

Well “Subscription” is new for ecommerce industry but it has a strong presence in the traditional format such as subscription of newspaper, magazines, TV channel subscription and many more. With the benefits experienced in it, it has now been introduced on consumer demands for online retail too which may incur many advantages through it.

Advantages of Subscription Commerce for Customers

1) Ease of ordering: Subscription commerce gives convenience to order the products or services instantly. Once you subscribe, you can enjoy the perks of receiving orders every month without ordering or reordering it again and again.

For e.g. Vegetables and groceries is something which need to be ordered on daily basis. Customers can easily subscribe for repeat orders and get them delivered daily without placing the order every day.

2) Timely Delivery: Get your products delivered timely every day, every month or every week without fail.

For e.g. Aged people can get their medicines delivered every month on time without any reminders or calls to the chemists.

Not only from the customer’s perspective, it is advantageous from retailer’s perspective too.

Advantages of Subscription Commerce for Retailers

1) Engage the customers: Post installing your app, its quiet difficult to keep your user engaged. Subscription Ecommerce can be one of the ways to remind them about you every month, week or quarter.

2) Long term relationship with the customer: Subscription business gives retailers the ability to communicate with their customers very often and a strong and long term relationship with them.

3) Affordable retention rate: When your customer subscribe for your products/services, the effort to bring them back is almost null. You do not have to spend on display retargeting, social, email, etc. to bring them back because they will automatically buy from you either every week, month or quarter which means you have lower or almost no retention cost.

4) High margins: You earn higher margins as the cost on the subscribed customer is almost zero and the revenue earned via them is fixed at regular intervals.

5) Stock forecasting: With knowing the orders well in advance, you get a better idea of how much to stock for future orders and there won’t be any wastage. You get the full- fledged order predictability.

6) Brand building: If a customer receives order on recurring basis, your brand becomes the part of their routine life, and further it can help in spreading a word about your brand. They can also promote your products and services indirectly via social media.

7) Consistent monthly revenue: Get a stable revenue graph with fixed monthly, weekly or quarterly revenue.

Apart from the above advantages, one of the biggest advantages is that acquiring a new customer in Subscription ecommerce means you hold a customer for a longer duration, rather than just a one-time purchase.

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Subscription commerce works well with only few industries. It doesn’t fit well for the industries like fashion, accessories, restaurants and electronics. But there are few industries that can earn maximum out of it.

Industry Verticals Where Subscription Commerce is Beneficial

Grocery: This is the best and the most suitable industry where the subscription ecommerce model can work well as groceries are something which needs to be ordered on weekly or monthly basis and that too in fixed quantity depending on the number of people residing in a family. Maximum chunk have a fixed set of grocery order list that they buy irrespective of any factors through your grocery app.

Pharmacy: Pharma industry is the one who can use the subscription model partially for their ecommerce app. For e.g. diabetes requires a monthly refill that is fixed so for such health issues, subscription ecommerce perfectly fits which provides convenience to the customers with timely delivery of medicines via their online pharmacy app.

Laundry & Dry Cleaning: This is one of the potential industry where the subscription commerce plays an important role as laundries are something which need to be done either daily or weekly and if you generate a certain amount of subscriptions through your laundry app, you can earn sufficient just through recurring orders that if you do not grab new customers then too you will never incur a loss.

Spa & Salon: Even spa and salon industry can follow subscription model partially for the services like quarterly haircuts, threading, waxing and so on which need to be done within specific time period.

Viewing the above we can conclude that the subscription commerce is the future of ecommerce industry and recurring subscriptions are the biggest win for any ecommerce sites.

With recurring revenue, perfect inventory forecasting, and fixed customers, Subscription Ecommerce has a great potential in near future.